Macroeconomic Summary of First 11 Months: Inflation at 5.22 %, Remittances Rises by 38.2%, Foreign Currency Enough to Cover 19.1 Months Import

Nepal Rastra Bank, the central bank of Nepal, has unveiled the current macroeconomic and financial situation of Nepal based on Eleven -month data (Ending Mid-June) of FY 2025/26.

Overall

Nepal Rastra Bank estimated that the inflation remained at 5.22 percent on a year-over-year basis. The gross foreign exchange reserves stood at 3755.64 billion in USD terms, whereas the total imports and exports increased 12.3 percent and 15.2 percent, respectively.

NEPSE index stood 2724.03 in mid-June 2026 compared to 2655.39 in mid- June 2025.

Inflation

The y-o-y wholesale price inflation stood at 8.47 percent in mid-June 2026 compared to 1.56 percent a year ago.

The y-o-y wholesale price inflation of consumption goods decreased 1.00 percent while intermediate goods and capital goods stood at 14.64 percent and 4.78 percent respectively. The yo-y wholesale price index of construction material increased 3.09 percent in the review month.

Import and Export

During the eleven months of 2025/26, merchandise exports increased 12.3 percent to Rs.277.97 billion compared to a growth of 77.8 percent in the same period of the previous year. Destination-wise, exports to India and other countries increased 13.6 percent and 9.2 percent respectively whereas exports to China decreased 35.8 percent. Exports of soyabean oil, palm oil, cardamom, noodles and brans among others increased whereas exports of zinc sheet, particle board, tea, woolen carpet and handicraft goods among others decreased in the review period.

During the eleven months of 2025/26, mercandise imports increased 15.2 percent to Rs. 1894.10 billion compared to a growth of 13.1 percent a year ago. Destination-wise, imports from India, China, and other countries increased 11.8 percent, 21.5 percent, and 18.9 percent respectively. Imports of petroleum products, silver, transport equipment, vehicle and spare parts, chemical fertilizer, and crude soyabean oil among others increased whereas imports of edible oil, hot rolled sheet in coil, garlic, M.S. wire rod, bars, coils and M.S. billet among others decreased in the review period.

Total trade deficit increased 15.7 percent to Rs.1616.13 billion during the eleven months of
2025/26. Such a deficit had increased 6.3 percent in the corresponding period of the previous year.The export-import ratio decreased to 14.7 percent in the review period from 15.1 percent in the corresponding period of the previous year.

Services and Remittance

Net services income remained at a deficit of Rs.72.54 billion during the review period. Such income had a deficit of Rs.82.78 billion in the same period of the previous year.

Remittance inflows increased 38.2 percent to Rs.2120.80 billion in the eleven months of 2025/26 compared to an increase of 15.6 percent in the same period of the previous year. During mid- May to mid-June (Jestha month), remittance inflows stood at Rs. 203.89 billion. In the same period of the previous year, such inflows were Rs. 176.32 billion.

Inter-bank Transaction

In the review period, interbank transactions of the BFIs amounted Rs.1039.76 billion on a turnover basis, including Rs.893.41 billion among commercial banks and Rs.146.35 billion among other financial institutions (excluding transactions among commercial banks). In the corresponding period of the previous year, such transaction was Rs.1,681.54 billion, including Rs.1,531.21 billion among commercial banks and Rs.150.33 billion among other financial institutions.

Price of Oil and Gold

The price of oil (Crude Oil Brent) in the international market increased 16.63 percent to US Dollar 88.64 per barrel in mid-June 2026 from US Dollar 76.0 per barrel a year ago. The price of gold increased 21.85 percent to US Dollar 4185.95 per ounce in mid-June 2026 from US Dollar 3435.35 per ounce a year ago.

Foreign Exchange Reserves and Adequacy Indicator

Gross foreign exchange reserves increased 40.3 percent to Rs.3755.64 billion in mid-June 2026 from Rs.2677.68 billion in mid-July 2025. In US Dollar terms, the gross foreign exchange reserves increased 26.5 percent to 24.68 billion in mid-June 2026 from 19.50 billion in mid-July 2025.

Of the total foreign exchange reserves, the reserves held NRB increased 37.9 percent to Rs
3330.07 billion in mid-June 2026 from Rs. 2414.64 billion in mid-July 2025. Reserves held by banks and financial institutions (except NRB) increased 61.8 percent to Rs.425.57 billion in mid -June 2026 from Rs.263.04 billion in mid-July 2025. The share of Indian currency in total reserves stood at 21.5 percent in mid-May 2026.

Based on the imports of the eleven months of 2025/26, the foreign exchange reserves of the
banking sector is sufficient to cover the prospective merchandise imports of 22.5 months, and
merchandise and services imports of 19.1 months. The ratio of reserves-to-GDP, reserves to imports and reserves-to-M2 stood at 61.5 percent, 159.5 percent, and 43.7 percent respectively in mid-June 2026. Such ratios were 43.8 percent, 128.1 percent, and 34.1 percent respectively in midJuly 2025.

Exchange Rate

Nepalese currency vis-à-vis the US Dollar depreciated 9.8 percent in mid-June 2026 from mid-July 2025. It had depreciated 3.0 percent in the same period of the previous year. The buying exchange rate per US Dollar stood at Rs. 151.88 in mid-June 2026, compared to Rs. 137.0 in mid-July 2025.

Nepal Government Expenditure and Revenue

According to the Ministry of Finance, Financial Comptroller General Office (FCGO), the total expenditure of the Government of Nepal stood at Rs. 1346.65 billion during the eleven months of 2025/26. Recurrent expenditure, capital expenditure, and financial expenditure amounted to Rs.908.27 billion, Rs. 132.67 billion, and Rs. 305.72 billion, respectively, during the review period.

Cash Balance of Government

Cash Balance at various accounts of the GoN maintained with NRB remained Rs. 418.54 billion (including Provincial Governments and Local Government Account) in mid-June 2026. Such a balance was Rs. 137.78 billion in mid-July 2025.

Banking

Domestic credit increased by 0.5 percent in the review period compared to an increase of 3.4
percent in the corresponding period of the previous year. On y-o-y basis, domestic credit increased by 3.1 percent in mid-June 2026.

Monetary sector's claims on the private sector increased by 7.0 percent in the review period
compared to an increase of 8.7 percent in the corresponding period of the previous year. On y-o-y basis, such claims increased by 6.4 percent in mid-June 2026.

Deposits at Banks and Financial Institutions (BFIs) increased by 10.3 percent (Rs.748.62 billion) reaching Rs.8,012.49 billion in the review period compared to an increase of 8.0 percent (Rs.517.60 billion) in the corresponding period of the previous year. On y-o-y basis, deposits at BFIs expanded 15.0 percent in mid-June 2026.

Private sector credit from the BFIs increased by 6.2 percent (Rs.340.57 billion) to Rs. 5,838.27 billion in the review period compared to an increase of 8.0 percent (Rs.407.62 billion) in the corresponding period of previous year. On y-oy basis, credit to the private sector from the BFIs increased by 6.5 percent in mid-June 2026.

Interest Rates

The average base rate of commercial banks, development banks and finance companies stood at 4.88 percent, 6.86 percent, and 7.16 percent, respectively, in mid-June 2026. The average base rate of commercial banks, development banks and finance companies were 6.09 percent, 8.29 percent, and 9.02 percent respectively in the corresponding month
a year ago.

Balance of Payments

Balance of Payments (BoP) remained at a surplus of Rs.926.06 billion in the review period. Such surplus was Rs.491.44 billion in the previous year. In US Dollar terms, the BoP remained in a surplus of Rs. 6.39 billion in the review period, compared to a surplus of Rs. 3.62 billion in the same period of the previous year.